Restaurant industry is competitive. But that should not stop you to get high profit margin on restaurant business. In this article, we share effective strategy to increase restaurant sales and profit margin.
How to increase restaurant sales and profit margin :
You should have at least 3-4 unique items in your restaurant menu. By using uniqueness, you can charge higher price and increase the profit. Make sure about quality of the item. You should first launch the pivot item before investing huge amount in it.
Claim GST on purchase: I have seen it many times. Restaurant owners are not aware how GST works. You should claim GST / Sales tax amount for every claimable purchase. You can get help of qualified accountant to guide you.
Reduce employee turnover rate: Finding and keeping good employees in business is the key of any successful business. Owners many times ignore this fact. You surely can reduce your cost by cutting pay of your employee for unreasonable reason but you have to overpay on employee training when that unhappy employee leaves the organization. By keeping employee long time into your organization, you develop connection between employee and business. If you treat the employee well, the employee will treat the customers well and vise versa.
Keep an eye on food wastage: Food wastage is not only harmful to your restaurant but a real problem to whole economy. You have to reduce food wastage in your restaurant kitchen. Advise your chef to implement strict policy of food measurement. Everything should be measured and used correctly while cooking.
Spot the hot selling food item: Get benefit of your hot selling food item. Keep checking your sales number and POS number for it. Promote the hot item heavily to improve your sales and beat the competition.
Maximize the use of delivery apps: Don’t be lazy in setting up restaurant accounts in food app. Food apps can be your real friend during this tough time of Covid19. People prefer to order food at home and you should leverage this opportunity. Don’t forget to keep an eye on performance of delivery apps.
Choose the best POS system:
Good POS system is the backbone of restaurant. There are plenty of options avaiable in market such as Toast Pos, lightspeed Pos, Shopkeep, Square, Epos now.
The restaurant software should have below features :
- Cloud based POS
- Solid data encryption
- Custom access control
- Easy to use and navigate
- Best customer experience
- Easy to make payment
- Generates helpful reports
- Inventory management
- Operating speed
Keep your supply cost low: As restaurant owner, you are purchasing food supply in good quantity. Don’t forget to negotiate for discount and the best rate. This habit will reduce your cost of goods sold in long run and increase the restaurant profitability. Read our post on income statement to get understanding of business profit.
Doing all restaurant tasks in house brings huge burden of payroll and decrease your profit. Additionally, hiring and training of employees is costly and time consuming.
As a good option, you can outsource processes to cut the cost and increase the productivity of your employees. Common tasks you can outsource are cleaning, marketing, bookkeeping, taxes, payroll, web design. Don’t hesitate to pay bit more to contractor for high quality of service. This will help you building good business relationship with contractor and having smooth business operation on consistent basis.
Buy second hand equipment:
I was not into buying anything second hand until I started my own business. It was really surprising for me that I could buy exact same item at less than half price by going with second hand route.
As growing business owner, you can easily cut cost of kitchen equipment by buying it second hand. There are two things you should consider while buying second hand equipment. One is quality check of equipment and another is money back guarantee. There are plenty of options available online which can fulfill these conditions.
Sell related items:
No matter whatever is the business. Profit can be increased by increasing average order value. You should implement upselling or downselling in your restaurant menu. Remember the waiter who insists few addtional items to try while you order at restaurant. That is upselling.
Upselling and downselling is trend in online food delivery apps. Your focus should be find the menu item which can be sold like hot as upsell.
Upselling can also be done using bundling. Bundle 2-3 items together and give it good name. And here you go !
We all love growing business. It is tempting to make big plan to expand restaurant business. However, you should expand your restaurant business graturally. Remember that The slow and steady wins the race.
You can grow your business by opening branch at new location or adding more items to your menu. Joining addtional food delivery apps is also an opetion.
Consider below points while growing your business:
- Do BEP analysis of expansion
- Use pivot model in growth to avoid the huge loss
- Leverage employee spare time
- Give priority to quality over growth
- Consider partnering option while growing
Implement reward system:
I used to order food frequently when I receive reward points or coupon codes from restaurant. Reward system is based on phycological principle of reciprocity.
It is win win situation for customer and restaurant. Restaurant gets more sales and customer gets quality items at low cost.
The reward can be given by coupons, deals, giveaway, free gift, reward points. Do not forget to find the cost of reward before implementing in your restaurant marketing campaign.
Provide the best customer experience:
Your work is not ended by getting customer. Your end goal should be keeping customer.
I remember the new restaurant I visited at my town. Everything was perfect. The marketing campaign, branding, decoration and staff manners. One thing was lacking – quality of food. And I never visited the restaurant again.
You can provide the best customer experience by combining high quality of foods, best customer service and clean eye catching restaurant environment.
Hosting events is the popular way to boost branding. However, you need to change the method of event during this covid19 pandemic. You can host online event or event with strict social distancing. The alternative method is partner with event company. The later method is easier and time effective.
You cant grow alone. You have to grow together. It applies to personal and professional life.
Partnering is the optimal way to boost sales. You can partner with online food suppliers, hotels, event organization, marriage organization, government organization or corporates to supply the food.
Hire good marketing agency:
I know you might say , ” I dont want marketing service. I market my business myself. ”
It is our illusion as entrepreneur that we can do everything. But marketing is the skill and you cant master it overnight. As an option, you can hire good marketing agency or freelancer and leverage its skill to boost your restaurant sales.
It is really hard work to build brand and operate restaurant business successfully. Its tough in initial years but huge rewarding later. I hope this post of how to increase restaurant sales gave you some insight and value. Share this post to social media to inspire me to write more.